We have to ask ourselves why college is so expensive.
When some people read articles like this, they call for more government aid to students. "We need to help young, hard working students from unprivileged backgrounds to pay for college!" Their hearts are certainly in the right place, and it isn't an unreasonable idea at first glance.
However, could this idea be part of the problem? Maybe giving people free money for college isn't the best idea.
There are four ways to spend money:
1) You spend your own money on yourself
2) You spend someone else's money on yourself
3) You spend your money on someone else
4) You spend someone else's money on someone else
When you spend your own money on yourself, you are very selective with how that money is spent. Not only do you gain from what you buy, you also lose money you could use to buy other things. The other three situations are ones in which being selective isn't as important to the spender.
Why does this matter? When people pay for college themselves, we are in situation 1; they have an incentive to choose a college they can afford while still being a great place to learn. When a student gets free money proportional to tuition, they can choose a school that charges ridiculously high rates for tuition. (Student loans are a middle ground. They are still spending money on themselves, but people the age of college students tend to be more frivolous with loans than money they earned, so they are still less interested in the price.)
The more students that get free money for college, the higher the cost of college becomes, because the equilibrium price of college gets distorted. If all student aid disappeared tomorrow, then certainly the cost of college would decrease.
If colleges get more money, then where does it go? Certainly not directly to education. It goes to fancy buildings to impress donors, and supporting the ultimate cash cow: government research grants. It goes to inflating the administrative staffs and inflating the salaries of the highest ranked members of that staff. If it was possible to pay for college on minimum wage, I wonder why we ever changed the system.
We have to ask ourselves why college is so expensive.
It's certainly not due to inflation in quality of education. More and more classes are taught by graduate students and adjuncts rather than actual professors (who are mostly focused on their research programs in order to earn tenure).
There are probably a few factors.
- increased student expectations of 'fun', leading to new facilities (dorms, student centers, etc), as colleges compete with each other for students
- increasingly top-heavy administration (hey, let's add another $300K Assistant Deputy VP of Student Diversity, etc) providing a path for faculty to 'advance' in their careers
- federally subsidized student loans make it less painful for colleges to increase tuition than if students had to borrow independently or pay out of pocket (this is especially egregious in for-profit education, where getting that federal money is key ... gotta get those marks, er, students enrolled so you get paid!)
Essentially, it's a racket where everyone has an incentive for the price to keep rising - except for the students and their families, and perhaps the government, who's underwriting this entire disastrous bubble.
- increasingly top-heavy administration (hey, let's add another $300K Assistant Deputy VP of Student Diversity, etc) providing a path for faculty to 'advance' in their careers
I'd like to point out that much of the administrative bloat has occurred because of new (bipartisan) laws forcing colleges to provide more services. There are services for veterans, services for the disabled, services for victims of crimes, oversight services for grants and such, etc. My girlfriend works for a university, and much of the administrative hiring they do is directly correlated to new requirements, laws, and administrative rules passed down from the federal or state governments.
So I think you're right, but don't place all the blame on the schools, just as much belongs to the political parties that like to use universities as a battlefield for whatever agenda they've got at the moment.
Edit: It is especially wrong to think that the faculty are driving administrative bloat when, in fact, the faculty are the biggest opponents (and literally stage rallies against it at some schools) because every dollar the university spends on an administrator is a dollar they don't spend paying a faculty member).
The vast majority of people have no aspiration towards being an academic administrator, and academic administrators aren't exactly a powerful voting block.
But disabled veterans are a voting block and they vote themselves extra services on campus and those services come with administrator. Repeat this process with every disadvantaged group and you have tremendous bloat.
You could make the argument that disabled veterans are the MOST important voting block and with good reason.
Please refrain from reducing veterans to a political action committee. They deserve much more than they currently get under our system. Try and get through the red tape at the VA and then tell me how you feel about the outsize effect that the veterans are having on the benefits debate.
Is it so unreasonable to believe that non-conscripted veterans deserve exactly the same financial status as their equivalent non-veteran counterparts? (Disabled or otherwise). This argument comes from anti-nationalist, pro-equality-of-opportunity values.
Veterans who go to war come back bearing terrible scars. They are routinely subjected to horrific conditions that would make you cringe. They are asked to do terrible things to terrible people and still maintain a standard of professional conduct that civilians cannot maintain.
SO I do believe it's unreasonable to treat war veterans, who volunteered to sacrifice themselves and their lives to defend our way of life, just like any other citizen who needs some governmental support.
Veterans who have no obligation to serve but do so anyway deserve our utmost respect and admiration. And on the list of people who contribute to the safety, security, and greatness of this country, they are at the very top.
True, but then you're talking about legislative votes, so more important than voting is action by pressure groups. Maybe it's accurate to say that they are "lobbying" themselves money.
Good point. My comment snarked at the faculty a bit, but I'm sure the rank-and-file don't love the top-heavy bloat either.
It's great for the mid to late career faculty member who wants to take the next step and become an administrator. It's less so for those whose areas of interest are lower priority and must tighten belts.
> It's certainly not due to inflation in quality of education. More and more classes are taught by graduate students and adjuncts rather than actual professors (who are mostly focused on their research programs in order to earn tenure).
UGH! These kind of comments make me so angry. Sure, lots of graduate students are sub par due to inexperience or distraction or pure, simple busy-ness, but lots and lots of professors don't give a damn either. I TA'd on and off for about five years, sometimes spending 20-30 hours a week meeting with students and doing 1:1 sessions with them to help them learn whatever topics the course required. Did I sometimes get stumped by a slightly off-the-beaten-path question in a recitation section? Sure. But I'd still take a motivated grad student over many of the professors I suffered through.
(And to be fair, tons of--perhaps even most--graduate students don't give a damn either. But the problem isn't "More and more classes taught by graduate students and adjuncts", it's a combination of "Lack of interest in being a good teacher" and "Lack of interest in incentivising good teaching".)
Fair point. The mere fact of having earned a PhD does not automatically make a person a great teacher, and lacking one does not make a person a bad teacher. I certainly had a few full professors who were phoning it in every class, droning over their 20 year old lecture notes.
However, in my undergraduate experience, the most interesting and memorable classes were taught by active professors with many years of teaching experience, who also had a good research program. It helped a lot when they would teach class material, and also connect it to what was current in their field of research.
FWIW my best undergrad classes were taught by endowed lecture chairs, e.g. professors who were paid extra by the university to stop caring about and doing research and instead focus solely on teaching.
No one is saying that it is bad to have TAs than professors. But the default assumption is that if a college increases tuition fees, then they are probably hiring better professors. But if you increase fees and hire lowly paid TAs, then that is certainly not fair is it? (or atleast increase TA's salary!)
PS: I actually hated most of my TAs and loved the courses where the professor didn't use a TA and was involved in teaching, himself.
>increased student expectations of 'fun', leading to new facilities (dorms, student centers, etc), as colleges compete with each other for students
This gets cited a lot, and sometimes people actually go to the trouble of citing the cost of a new facility at $x million. Is there evidence that these facilities actually raise the cost substantially per student per year? Often when I hear people getting offended about, say, a $15 million building, I run a back-of-the-napkin calculation and it's not even a drop in the bucket on a tuition bill when you consider that it's going to serve something like 40,000 people per year for more than 30 years.
It's a commonly-expressed complaint at my private, engineering-focused school that, of all the egregious capital investment is in things that have high donor selling potential but little use to the student body: a beautiful new athletic facility (we're D1 in only one sport) and a "performing arts center" where artists are subsidized residency and no student programs (not even through our tiny arts department) are accommodated.
If a new building replaces an old building, those costs should be the same as or lower than the older building, per square foot. If the new building does not replace an older building, it should allow the college to enroll more students or provide other services that bring in more revenue to pay for those ongoing costs.
A lot of courses taught these days also are sold as a package from the textbook companies. Often, a textbook comes with premade slide presentations (aka, lectures), projects, and tests based on their material. So even when you have professors teaching, a good number of them are really not doing much work themselves.
Teachers/administrators are told that they need these packages from corporations to make sure students best learn the material and to make sure that teachers best teach material, too, but what really ends up happening is that teachers become worse at teaching and students become worse at learning because more organic methods of education (teacher-student interaction, certain forms of abstract thinking, etc) can be forgotten, and we can see the lines between offline/online schools blurring as education becomes a corporate process like so many other things in our age. It is a bad racket all around.
As someone who's worked for a college before, there are things I could say about accreditation, but won't because it's generally a valid practice.
In the US, few students get much free money these days. Instead they get loans which charge hefty origination fees - like 5 points, and which are almost impossible to discharge via bankruptcy...despite the fact that many of them are backed by insurance and those which are not insured typically compound interest during the time the student is in school (typically on the full principle).
The bloat has not been fueled by anything but massive consumer debt foisted on those least experienced with personal finance and with the least work experience and who these days are lucky to find an entry level professional position.
I agree. Most of those loans, however, are sponsored by the government and can't be defaulted on. No normal lender would give an 18 year old $50,000 to get a degree in anthropology, because they are unlikely to get it back. When the student is legally obligated to pay it back, then there is much little risk to the lender.
If defaulting on student loans were possible, then the cost of college would decrease.
But this is exactly how UK student loans work - you only pay them off if you make more than X amount of money per year(and then the amount of money you pay off is proportional to how much you make), and if you never make that much money, then you never pay it off and after 40 years the loan is forfeit.
The same loan/tuition dynamics don't apply in the UK, because:
- The government controls undergraduate tuition fees for UK/EU students (currently capped at 9k per year).
- Until about 25 years ago, undergraduates' tuition fees and living expenses were paid by the state. These two direct subsidies have gradually been replaced by student loans. It will take some time for people's tolerance for larger and larger student loans to match that in the US.
How would allowing defaults on government guaranteed student loans lower the cost of college? Cost would likely increase for most students.
If loan interest rates were increased to compensate for the additional losses this would increase the cost for everyone getting a college loan who doesn't default. And since default has significant costs overall costs would also go up. Lastly this would reduce the incentive to make wise decisions on educational choices.
On the other hand if interests rate remained the same then this be an would increase government subsidies and thus demand and thus costs for everyone. And again would reduce the incentives to make sound financial choices on education spending.
Either way costs would very likely increase for most students and we would get a less efficient education system.
> No normal lender would give an 18 year old $50,000 to get a degree in anthropology, because they are unlikely to get it back. When the student is legally obligated to pay it back, then there is much little risk to the lender.
I think the argument goes like this:
1. Allow college debt to be defaulted on
2. After some time the government (or banks) will start to assess the risk of making student loans
3. Some time after that the loan market for students will be less crazy and more rational
4. With enrolled students able to spend less, colleges will be forced to charge less or lose students
5. Some college close, others stay open
6. College now costs a more reasonable amount of money
We're seeing the same dynamic in the college market as we saw in the housing market. The banks were typically in the business of saying "no, you can't do that" to people who were borrowing money, thus enforcing restraint on those who didn't have enough on their own. Once the banks stopped saying "no" when people were not a good credit risk, everyone went nuts and bid housing up to rather crazy levels. Housing prices are inversely proportional to interest rates in a very nonlinear way.
The situation is similar in the college market. The interest rates are more sane, but the risk assessment is much worse. There's all kinds of loan money sloshing around and not a tremendous amount of out-of-pocket money. If college had to be paid out of pocket you'd see lower enrollment or lower prices or both. Allowing defaults will force the market from largely loan-funded to a more reasonable mix of loan and out of pocket funding.
Don't forget that this debt is massively subsidized by government. Do you think a bank would give a traditional loan for hundreds of thousands of dollars to a middle-class student straight out of high school pursuing a Bachelor's Degree in, say, history?
There's a $57,500 lifetime limit on federal student loans for undergraduates. The people you see on the news complaining about their $200,000 english degree debt are people who have rich family who cosigned a bunch of private loans for them. (And who will make the loan payments when the english graduate inevitably can't.)
With federal loans, you can only take out at most $5,500/year as an 18 year old, which doesn't do a lot. Cost of attendance in my home state is $20,000/year, so that's about 25% of what you need to go.
I think a lot of the rise in tuition has to do with jobs. Society tells people they need to earn a living through a job. This makes people desperate for jobs to the extent that they'll generally pay whatever it takes to maximize their job prospects.
So, basically you have a situation in which demand for the best possible education is inelastic. Pretty much everybody wants it and is willing to pay anything they can for it. If you offer students more money to spend on their education, they naturally will.
That means that schools are in the very powerful position of deciding who deserves the privilege of an education. But, at the same time, they're competing with each other for the best students. If money is no object for the students, you can bet that schools will spend as much as possible to get the "best" students. Fancy buildings aren't just there to impress donors. They're there to impress prospective students.
I think MOOCs will help and basic income will help. High tuition isn't a problem if you don't need to go to school. You don't need to go to school if you don't need a job and you can educate yourself elsewhere.
MOOCs will only work if they garner a reputation of providing education relevant to employers or even lead to jobs. Also important are college connections to businesses to facilitate internships. Internships can really make or break you in same cases.
I know most MOOC courses are up to par. I've taken several and the introductory Python programming course at Udacity was more difficult than any of the classes from my arts degree. Right now, a certificate from a MOOC is about as worthless as a certificate I make for myself. I could take those Python skills and do useful things that would make me stand out among other candidates, but that requires a willing ear. Rare exceptions are employers who are actually aware of MOOCs and also favorable to the idea.
I could sell the idea of a MOOC in an interview, even show what I've learned, but getting the interview with MOOC credentials seems very suspect unless you find that aware employer. The idea of MOOCs (free education that leads to employment) threatens colleges, but I don't think the existing MOOCs are currently having an impact on price. When they will begin to have an impact is anyone's guess.
When you say "MOOCs will only work if..." it really depends what you mean by "work." Does it make sense for the goal of education to be jobs?
Like you say, high quality MOOCs can really help people learn. The reason I mentioned MOOCs alongside basic income is because basic income removes people's dependence on jobs.
Although heavy subsidization is a major enabler of the problem, it is not the only factor. Affordable education is out there. The problem is that people have been conditioned to believe that cheap education is bad education.
The problem is the students have been fed the lie that more "prestigious" schools yield better outcomes. Although this might be true in an extreme minority of situations (investment banking is one example where prestige matters), for the most part, the ranking and cost of the college don't matter at all.
Everyone simply ignores selection bias and assumes that getting into the "best," most expensive school possible will improve their life. In reality, if you control for selection bias, there is no difference between the outcomes one gets from Harvard and the outcomes one gets from Suffolk. In fact, the people who make the most money out of college are community college graduates. (Obviously, this is influenced by a lot of factors, but the blanket assumption that a high-end four-year school is automatically better is clearly false.)
For some reason, no one bothers to actually evaluate the value of their education critically. Instead, everyone simply buys into the collegiate cult of prestige.
The problem is the students have been fed the lie that more "prestigious" schools yield better outcomes. Although this might be true in an extreme minority of situations (investment banking is one example where prestige matters), for the most part, the ranking and cost of the college don't matter at all.
When I was in high school deciding which colleges I might want to attend, the guidance counselors spent great effort emphasizing that median salaries from all schools n (where n >> 1) years after graduation tended toward the same value, even if graduates from prestigious schools had better salaries at n=1 or n=2.
What I want to know is how the top quartile, top decile, etc. compare, especially for fields in which there are large companies paying high salaries, but primarily to graduates from prestigious schools.
But they're not buying -- or attempting to buy -- education. Rather, they're buying prestige and access to prestigious people, which is a positional good. And you can't simply produce more of a positional good, since it's the ranking that matters, not the absolute quality.
It's popular here to blame the growth of administrative and non-teaching staff on a self-serving bureacracy, but I don't think that's the case, it is due to circumstances.
The size of IT infrastructure has grown immensely compared to 30 years back, so you need people to take care of that. My department has four IT support people, and they carry a full workload.
The amount of foreign students has grown, consequently you need people to keep track of immigration requirements that seem to get worse each passing year, and you also need cultural programs, you can't expect people from non-western countries to be thrown into an alien culture and succeed.
The number of non-traditional and first-generation college students has grown, if the student body consists only of middle-class and wealthy people you don't need support staff for the students who teach them how to study.
Then there is career services, these things are expected these days. Back when you knew the major employers, and they had a hiring pipeline at your university.
There is also this competition through facilities, gyms and really fancy dorms are the norm, and those things need looking after.
Anyone who proposes cutting back on administrative staff must give suggestions how to deal with all these issues.
Everyone pays for these services, but not everyone uses them. For example, I had to pay a ridiculous $600 per year for the recreation center fee in college. I never once stepped in that place, and they wouldn't let me not pay it. I also never used my college's career center, and I have a job.
The services you listed are great; I'm not saying gyms and career centers are bad at all. The problem is that everyone in the school is forced to pay for them. The bloat comes because they get more funding than they need.
Everyone pays for these services, but not everyone uses them.
Here's the deal: it's not about you, it's the university that runs the numbers and decides where the scarce funds will go. (Yes, the funds are scarce. The machinist in my old department will retire soon, and the fear is that there won't be a replacement. When he leaves it will be a disaster, there won't be custom-built instrumentation any longer.)
If the rec. center attracts more tuition than it costs to provide there will be a rec. center. If the center for remedial math will prevent an unprepared student from dropping out - if three years more in tuition provides more money than running the courses then there will be remedial math. That's how non-teaching staff are allocated.
> The amount of foreign students has grown, consequently you need people to keep track of immigration requirements that seem to get worse each passing year, and you also need cultural programs, you can't expect people from non-western countries to be thrown into an alien culture and succeed.
Um, most of the reason foreign student enrollment has grown is because foreign students pay cash. Adding bureaucracy to manage students who whom you admitted primarily because they carry cash is not something I particularly sympathize with.
Not to mention colleges usually charge foreign students DOUBLE, even when they are from third world countries.... So if foreign students extra cost, it must already get covered by what they pay extra
Exactly. If people saw the cost to provide these services as a % of their tuition, I am guessing most students would prefer to simply do without and pay less.
Looking at my local university's budget, research and educational costs still account for most of the budget. But research costs are becoming enormous - they're spending over 1/3 of the budget on research, and only half as much on education.
Which isn't to say that we shouldn't be spending money on research, or that universities shouldn't be the ones to do it. But considering that government funding for research has been stagnating lately, I wonder if a less-explored factor in the situation hasn't been that we've slacked off on investing in research and are sticking our kids with the bill instead.
Together, research & education is a bit over half.
Of the rest, the 5 next biggest things are financial aid at 12%, "enterprise operations" (which covers administration of everything from state labs to the student bookstore) at 8%, student services (including athletics) at 7%, academic support (administrators, libraries, etc.) at 6%, and physical plant at 6%.
Different Universities exist for different purposes; often times multiple purposes at once. You can't run a research and educational system without administration. But as a student, I don't see gleaming new facilities or well-paid professors with nice cars. I see everything is crap, the professors are unhappy/underpaid, and the students are depressed and going into huge amounts of debt to pay for all this. Where's all this money going? Who are the ones getting rich from our future?
I think the problem is the loans. It drives prices up. Because when college prices go up, kids just get a bigger credit. It looks so far in the future, at 18 they don't really know if they will be able pay them.
You've identified a big part of the problem, but one also needs to consider the overall economic environment during that period. The chart in the blog post starts at 1980, showing that you could work 10 hrs and pay for a credit-hour of tuition. But remember, 1980 was the end of the financially disastrous 1970s. The 80s and 90s were boom decades, so parents with money in the markets were increasingly able to pay for college for their kids. This added to the demand side of the equation, along with the easy money in loans and grants, to cause the explosion in tuition.
You're also right about the buildings and staff bloat. I work at a state university and see all of that happening. The IT organization is honestly twice the size it needs to be, if people were held accountable for being even moderately productive.
> We have to ask ourselves why college is so expensive.
In the US at least, my understanding is that it's relatively easy for college students to get loans to pay for their education (I have several US citizens friends who did that and repaid their loans over the years), so this amounts to easy credit. When free money is available, prices tend to go up, and the more government steps in to provide low rates kind of loans to students, the more the universities can increase and inflate their prices because the supply of cheap credit increases. It's a well known mechanism in economics.
This would just be a recipe for increasing inequality among college goers. The families who can pay for the more expensive colleges will continue to do so, while you'd be taking away the opportunities for less privileged kids to go.
I believe the question, "Why college is so expensive" is the right one, but I don't think this is the right solution.
> We have to ask ourselves why college is so expensive.
Because you cannot discharge student loan debt through bankruptcy.
If students could discharge their debt, loans would match risk better and decrease. In turn, colleges wouldn't be able to raise their prices as far since they would price themselves out of students.
I don't know anyone who gets free money for college, except for people who inherit their money or have rich parents. I feel like this is a really central part of your argument, and it doesn't hold water. Every cent we go into debt has to be paid back with interest, and the students who have to foot the bill have zero input in the hiring standards of the companies we have to work for when we graduate.
I think trying to save money by cutting benefits to underpriveliged people is extremely wrongheaded. That money is an investment, it's not just set in fire and wasted. (For that, see the vast taxpayer subsidies we hand out to telecoms and dirty coal companies..)
I didn't even think you were talking about grants. Are you saying grants are responsible for high tuition costs? Without grants, the gap would have to be made up in student loans. What good would that do? It would simply make students assume a higher debt burden to get the same education that society demands from them.
Gonna jump in here -- what makes you so sure it's grants rather than the way college loans work?
I haven't done the numbers but I suspect there's like 10x as much tuition coming from loans as there is from grants -- wouldn't that make grants a tiny portion of the problem?
> We have to ask ourselves why college is so expensive.
I think there is a more simplistic answer to this question.
1. Obama said everyone should go to college. (demand increases)
2. Supply is scarce (we don't have enough good teachers, so people are battling to go to the best university however way - money - possible)
3. If demand increases, and supplies decrease, it means price elasticity expands (prices go up)
4. Right now we are trying to increase supply but are struggling (MOOC's will save us!)
So let's all go back to the beginning now and ask ourselves "Why does everyone need to go to college?" I think that's the real question to be answered here.
2.) False. There are waaaaaaay too many professors, to the point where most aren't tenured and make barely livable wages. There is a limited supply of universities, but it seems like most collude on prices, or at least refuse to compete on price. At any rate, universities seem to scale pretty well to handle extremely large population bodies, aside from a few statistical outliers that don't matter for this conversation.
3.) Demand has been constant for a while, along with supply. Easy credit is the driver of price change here, not a radical shift in supply or demand.
4.) "We are trying to increase supply". Education isn't what's lacking. You can learn a lot from independent study and books. What's lacking is degree factories. MOOCs aren't degree farms, so they are not an equivalent good.
Why would universities need to compete on price if there are surplus qualified professors? It sounds like the low wages are a function of excess supply.
Most universities staff up to handle as many students as they wish. They have a glut of students.
In this environment, you would expect more universities to flood the market to capitalize on the high profit, but that isn't happening. There is an excess supply of professors, but not universities.
This might be due to regulation, accreditation, high capital demand, and or the inability to create a lean university that just offered specific curricula. Is it so absurd to think a CS degree could happen entirely online and mostly asynchronously?
I don't think so, but it hasn't happened well yet.
So high barriers of entry + inelastic demand because easy credit = no universities created to drive down price.
> So let's all go back to the beginning now and ask ourselves "Why does everyone need to go to college?" I think that's the real question to be answered here.
Nope.
Everyone should be able to get a college education without having to pay exorbitant prices. The solution isn't to tell people not to go to college. It's to make college education cheaper, and NOT by student loans etc. That just equates to free money/easy credit and thus lets colleges inflate their prices to ridiculous amounts.
Its simple as this: If you are selling candy to a kid and he asks the price, u ask how much money can u get your dad to pay? If the dad is wiling to spend a LOT (like the govt and its loans) then obviously price skyrockets
A decrease in state funding isn't the same thing as making student loans cheap and easy to obtain. As long as students can keep drawing larger and larger student loans the cost of tuition will continue to rise. After all, the Universities aren't on the hook if the student can't pay back the loan.
What do you mean by "equilibrium price"? I usually hear that term when people are talking about the price that equalizes supply and demand, but many of the most expensive colleges are priced well below the supply/demand equalization point, so I assume you are referring to some other equilibrium.
I don't know if you were being facetious or not, but both Bill Gates and Mark Zuckerberg were college dropouts. And of course there is the fact that most people who do graduate college don't make nearly the amount of money that those two did.
Cumulative long-term effort is much reduced when you can turn a signal into a moat. Currently serving supreme course justices come from only 2 schools. Look at the pedigree in investment banking and top consulting firms.
Universities these days are sitting on huge cash reserves. And then also look at how much cash is being spent on new buildings. Buildings at Stanford were torn down are less than 8 years old.
When some people read articles like this, they call for more government aid to students. "We need to help young, hard working students from unprivileged backgrounds to pay for college!" Their hearts are certainly in the right place, and it isn't an unreasonable idea at first glance.
However, could this idea be part of the problem? Maybe giving people free money for college isn't the best idea.
There are four ways to spend money:
1) You spend your own money on yourself
2) You spend someone else's money on yourself
3) You spend your money on someone else
4) You spend someone else's money on someone else
When you spend your own money on yourself, you are very selective with how that money is spent. Not only do you gain from what you buy, you also lose money you could use to buy other things. The other three situations are ones in which being selective isn't as important to the spender.
Why does this matter? When people pay for college themselves, we are in situation 1; they have an incentive to choose a college they can afford while still being a great place to learn. When a student gets free money proportional to tuition, they can choose a school that charges ridiculously high rates for tuition. (Student loans are a middle ground. They are still spending money on themselves, but people the age of college students tend to be more frivolous with loans than money they earned, so they are still less interested in the price.)
The more students that get free money for college, the higher the cost of college becomes, because the equilibrium price of college gets distorted. If all student aid disappeared tomorrow, then certainly the cost of college would decrease.
If colleges get more money, then where does it go? Certainly not directly to education. It goes to fancy buildings to impress donors, and supporting the ultimate cash cow: government research grants. It goes to inflating the administrative staffs and inflating the salaries of the highest ranked members of that staff. If it was possible to pay for college on minimum wage, I wonder why we ever changed the system.